Farmers Guide to Texas Bankruptcy

With the soaring cost of production compared to stagnant commodity prices, agricultural experts expect the number of Texas bankruptcy cases filed by farmers to rise in the coming years. Because farmers make up the backbone of America’s food dependency and security, the US Bankruptcy code outlines a special chapter of bankruptcy sole for insolvent farmers, under Chapter 12 bankruptcy protection. Family farmers and fisherman who operate commercial commodity operations in Texas will find helpful information about filing for Chapter 12 bankruptcy protection here.

What is Chapter 12 Bankruptcy?

Chapter 12 bankruptcy was designed by Congress to be a streamlined version of bankruptcy especially for individuals or families that are engaged in farming or commercial fishing. In order to qualify for debt relief under Chapter 12, total debts must not exceed $4,153,150 for farmers or $1,924,550 for commercial fishing operators with at least 80% of farming debts or 50% of commercial fishing debts directly related to operational costs of running the agricultural business. Additionally, half of a debtor’s income must come from the farming or fishing operations.

Chapter 12 bankruptcy work in much the same way as Chapter 13 bankruptcies do: a petition is filed in the Texas Bankruptcy Courts and a meeting of creditors takes place. From there, a three to five-year “debt reorganization plan” is created that will allow the debtor to discharge any unsecured claims that aren’t covered by disposable income. All other unsecured claims will be discharged, or wiped out at the end of the Chapter 12 plan.

How is Chapter 12 Bankruptcy Different?

First and foremost, only “family farmer” or “family fisherman” who earn a regular annual income from their farming activities are eligible to file for Chapter 12 bankruptcy. While Chapter 11 bankruptcy exists for all other forms of business, Chapter 12 bankruptcy was created to make the Texas bankruptcy process faster, less complicated, and cheaper than Chapter 11 bankruptcy. Chapter 12 also differs from Chapter 13, in that it takes into account the much larger debt load that a family farm typically carries.

Should I Contact a Bankruptcy Attorney?

Chapter 12 bankruptcy cases are not as common as Chapter 7 or Chapter 13 bankruptcies in Hurst, Wichita Falls, or Dallas, TX. However, there are cases that arise and nearly all can benefit from the expert assistance from a Texas bankruptcy attorney who is knowledgeable of the US Bankruptcy Code, in addition to, Dallas bankruptcy Law.

Are you a candidate for bankruptcy?

Would you like to find out if bankruptcy is the right option for you? Try our Free Online Bankruptcy Evaluation. 4 easy steps to see if bankruptcy could be the right option for you!